Is your Board a window dressing?
In Uganda, we have a situation whereby people put in systems for the sake of it. To the outsiders, you think the system is working when actually it is not functional. As they say, the fish starts rotting from the head, when it comes to governance; it also starts rotting from the head. If the quality of the Board is not good, the organization will not succeed.
Signs of window dressing Boards
We have had situations whereby for a given business to access certain services, it has to project an image of being well governed. An image of good governance comes when they see you have for example Board of Directors, Internal Audit, External Audit, anti-fraud policy and procedures and management structures. But when you see keenly, these structures are in place but not effective.
(a) Incompetent internal audit
You have the internal audit, but the internal auditor just graduated in Business Administration and does not understand what good internal auditing is all about. He does not know the qualifications of internal auditing he is only doing things like a police man. The value from audit is not there.
(b) Unregulated external audit
People have got external audit but the external audit are not members of CPA (U). They are not regulated. The quality of work they are doing leaves a lot to be desired. Most of the companies will say they have Board of Directors but you find the people are relatives of the owner, are just friends and can not provide independent oversight. They can not question how things are being done. Good governance is all about the quality of the people you have; it is not about just having something.
(c) Board of Directors involvement in fraud
You have seen cases in government; top companies the Board of Directors have been involved in high level fraud. The cases of Katosi road fraud scandal, in normal instance the Board chair should resign. You can’t cause that kind of loss to the government and population and stay with the job. In effect, these are window dressing Boards. They are there to project that they are well managed yet actually in practice they are not adding any value of oversight and risk management.
The challenge we have is that most of these companies given the nature of their set up; they are supposed to be successful. For example a company like National Social Security Fund (NSSF), the way it is set up it is not competitive. They are more about collecting money. You do not need a lot to get income, as long as you fix collections, you will get the money. Now that is different from an organization in the private sector where you have to look for business and to get customers you really have to be competitive.
You must therefore avoid going to window dressing Boards. Good governance entails that all Boards should be active.